The Internet is a great tool for business, it provides new channels for how companies communicate with their customers and sell products, provide services and make money. Unfortunately, the Internet is also good for criminals to exploit businesses for their own benefit.
In the year Global online payment fraud is expected to reach $41 billion (USD) by 2022, more than double from last year. With that in mind, if you’re running an online business, you should consider implementing customer verification best practices.
What is Customer Verification?
Customer verification is the process of verifying the accuracy of information provided by users online. Essentially, proving the customer is who they say they are. So when you receive payments online, you know exactly where the funds are coming from.
Customer verification, in some form or another, is generally a requirement for running a business online. Companies must comply with customer verification procedures set forth by the relevant regulatory agencies and governments in which they operate. This protects both the customer and the business, reducing fraudulent transactions or identity theft.
With customer verification, you can reduce the costs associated with incorrect information, and guarantee products are delivered to the right address and services are provided to the right person. Additionally, it is very important for businesses that sell age-restricted products.
Different types of customer verification
There are many best practices for implementing customer authentication. The most popular types include:
- Multi-factor authentication: Two or more credentials from the customer, commonly used by banks and other financial institutions. The evidence may be something internal to the individual, specific knowledge about them, or something of their own.
- Age Verification: Used for age-restricted products or services, this customer verification form requires the customer to provide their date of birth.
- One Time Password (OTP) Verification: Typically, an email or SMS is sent to the customer’s account containing a unique, time-sensitive (ie, expires after a certain period of time) code or password.
- knowledge-based authentication; Asking customers to re-enter personal information about themselves, such as their full name, address, phone number or email address.
- Photo or Video Verification: A more modern method requires customers to provide photographic or video proof of themselves.
When it comes to customer authentication, it’s highly recommended that businesses take the time to learn best practices and find ways to improve the process for both parties.
Customer verification standards
Most consumers today are in a hurry, and jumping through extra hoops when shopping online can be frustrating. As a business, it’s your role to show your customers that you value their online security. This can be easily done by explaining the reasoning behind your customer verification processes.
Whether your business is simply complying with regulations or going above and beyond to add protection, better-informed customers have a better shopping experience.
Streamline the process by implementing single sign-on (SSO).
Speeding up the process without paying security always goes a long way. One of the best customer authentication methods available today is SSO. This allows customers to verify their identity by logging into their account from other popular services such as Facebook or Google.
By referencing your online store to other trusted services, you can quickly verify identities, simplifying the process for customers. They no longer need to go through the process of creating an account, providing information about themselves, and generating another username and password to remember.
SSO can also help your business protect against fraudsters or bots who want to create an account on your website or app.
Collect the correct payment information
As mentioned above, there are many different types of customer verification available to your business. When it comes to online payments, you need to do your due diligence and gather all the necessary information. This will vary depending on your business model and whether you sell to consumers or other businesses.
Important customer information you should record when dealing with individuals:
- Name
- date of birth.
- Home or work address.
- email address.
- account or social security number
You must collect additional information when dealing with businesses, such as:
- Business name.
- Business a.
- Business address.
- Information for an authorized representative (eg, name, email address, date of birth, ID or social security number).
Use software to automate customer verification steps
Manually verifying each client can quickly become a problem. What happens if you get a rapid increase in customers and your staff can’t keep up? Relying on manual processes creates bottlenecks that slow business growth, and are tedious and lengthy processes for customers.
An even better solution is to incorporate identity verification software that can automate the process. With technology at your side, you can verify customers in real time while also reducing the risk of fraud and identity theft and complying with important regulations.
There are many identity verification solutions to choose from, and it’s worth doing your homework to find the one that best suits your business needs. They want to be able to quickly verify their customers wherever they are in the world and provide customized services based on their location. It is also important to ensure that any identity verification software you purchase is safe and secure, meeting international and local regulations.
Protecting all parties with customer verification
Customer verification is a fundamental part of running an online business. When designing authentication processes for your business, the goal should always be to maximize protection for you and the customer without compromising the shopping experience.
You need to properly identify everyone you sell to, comply with any legal obligations and create a smooth and easy process for customers visiting your online store. With the ever-increasing threat of online fraud, now is the perfect time to upgrade your customer verification process to incorporate current best practices.
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